S'pore shares dive on US inflation concerns; STI tumbles 1.9%

The bloodletting that has roiled global markets this week on the back of inflation fears sent local shares crashing yesterday in line with other bourses in the region.

The flow of red ink here mirrored overnight falls on Wall Street as spooked investors try to get a handle on where the economy - particularly the tech sector - is headed.

There was no hiding place for the Straits Times Index (STI), which plunged 1.9 per cent or 61 points to 3,165.18 following the new US consumer price index (CPI) data.

The pain was widespread with losers easily outnumbering gainers 418 to 149 after 2.09 billion shares worth $1.99 billion changed hands.

"The much-awaited CPI data revealed the first deceleration in consumer prices in eight months. But with the descent coming in slower than expected, it has kept the US equity markets on edge," said IG market strategist Yeap Jun Rong.

While dipping 0.2 percentage point from March, headline consumer prices rose 8.3 per cent year on year last month, remaining higher than market forecasts.

This raised hopes that the pace of price rises has peaked, but reaffirmed fears that interest rates will need to rise fast to tame inflation.

The result was a sea of red across key Asian markets. Hong Kong's Hang Seng slid 2.2 per cent, the Nikkei 225 fell 1.8 per cent, Seoul's Kospi dropped 1.6 per cent while Malaysian shares lost 1.1 per cent.

Australian stocks dived 1.8 per cent to its lowest point in just under five months and 8.6 per cent below the near-record high on April 21.

The sole gainer on the STI yesterday was SGX, which rose 1.2 per cent to $9.50, while Yangzijiang Shipbuilding took the bottom slot, plunging 11 per cent to 81 cents and was also among the most active with 55.9 million shares traded.

Singtel remained the most heavily traded index stock this week, falling 0.7 per cent to close at $2.81, with 89.3 million shares traded.